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Equinor increases resource estimate, reduces investment cost forecast for giant Sverdrup oilfield

28 August 2018

On August 27, Norwegian oil group Equinor upped its estimate for the Johan Sverdrup oilfield in the North Sea to 2.2 - 3.2 billion barrels of oil equivalent, up from a previous forecast of 2.1 - 3.1 billion barrels. It also said the cost of developing the oilfield, the North Sea’s largest discovery in more than three decades, would be lower than it originally forecast.

Johan Sverdrup phase 2. Illustration: Try/Equinor
Johan Sverdrup phase 2. Illustration: Try/Equinor

The overall cost of developing the field has been cut to 127 billion Norwegian crowns (NOK) ($15 billion), down some NOK 6 billion since February and by NOK 80 billion since it submitted the Plan for Development and Operation (PDO) for the first phase in 2015.

Equinor and the Johan Sverdrup partnership of Lundin Norway, Petoro, Aker BP and Total announced the revised estimates as it submitted the PDO for the second phase of the project to the Norwegian Ministry of Petroleum and Energy.

The group said at plateau, the field would produce up to 660,000 barrels per day, with a break-even price of less than $25 per barrel and very low CO2 emissions of 0.67 kg per barrel. The Brent North Sea benchmark currently trades at around $75 per barrel.

Full field development of Johan Sverdrup is projected to contribute more than NOK 900 billion in income to the Norwegian State over the lifetime of the field. Emission savings from the Johan Sverdrup field are estimated at 460,000 tonnes of CO2 per year, which is equivalent to annual emissions from 230,000 private cars.

“We have completed nearly 80% of the first phase of the development, and it is gratifying to see that the good momentum and quality of the construction phase seems to be continuing in the installation phase offshore. This means that we are on track to start production from the field in November next year,” said Margareth Øvrum, Executive VP, Technology, Projects & Drilling at Equinor.

The updated investment estimate for Phase 1 is now NOK 86 billion, a reduction of 30%, amounting to NOK 37 billion since submission of the Phase 1 PDO.

Øvrum said the group has built on the experience gained from Phase 1 to optimise the development concept for Phase 2 in cooperation with partners and suppliers. “Throughout the entire history of this industry, I don’t think we have ever seen a project that has been improved as much as Johan Sverdrup has over the last three years,” she said.

In connection with the development of Phase 2, Equinor and the Johan Sverdrup partnership have established a full field digitalisation and technology plan to further reinforce safety and efficiency in operations, increase value and reduce carbon emissions from the field.

“Johan Sverdrup will be best in class on digitalisation and new technology. Digitalisation will reinforce the effect of several improved recovery technologies. Together, this has allowed us to increase the resource estimate for Johan Sverdrup, while simultaneously raising the ambitions for the field’s recovery rate to over 70%. This will make Johan Sverdrup a world leader also in terms of the improved recovery,” said Øvrum.

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